Gold Marketwatch – Monday 01/06/09

Market Commentary
Gold opened just below its highs at 985.50/986.50 and touched 986.50/987.50 just after the session began. The dollar made back lost ground on the back of better than expected personal income and spending,
causing gold to slip finding support near 980.00. It later recovered from this level as the market became well bid. However resistance was established around 985.00 as dealers took profit, dragging the metal to an intraday low of 974.00/975.00. The dollar later lost steam and gold climbed from its lows, trading erratically as the day unwound, closing at 978.50/979.50.

Technical Commentary
Gold powered to fresh highs today near 988 but is currently closing right where it opened at 977 (during the NY time zone). In candle stick analysis this is known as a “Doji” and signals “indecision” between the bulls and the bears. Typically after a prolonged trend Dojis serve as a huge warning that a trend is about to end. We are officially on reversal watch. A lower close tomorrow confirms a turn (and our exit from the long position).